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Is a Beat in Store for Alaska Air (ALK) in Q4 Earnings?

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Alaska Air Group (ALK - Free Report) is scheduled to report fourth-quarter 2023 results on Jan 25, before market open.

The company has an unimpressive earnings surprise history, having surpassed the Zacks Consensus Estimate in two of the preceding four quarters and missing twice, the average miss being 4.63%. The Zacks Consensus Estimate for fourth-quarter earnings has been revised 15% downward over the past 60 days.

Alaska Air Group, Inc. Price and EPS Surprise

Alaska Air Group, Inc. Price and EPS Surprise

Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. Quote

Given this backdrop, let’s examine the factors likely to have influenced Alaska Air’s performance in the to-be-reported quarter.

High fuel costs are likely to have dented ALK’s bottom-line performance in the December quarter. With oil prices moving north, fuel cost per gallon is likely to have been high. For fourth-quarter 2023, Alaska Air anticipates economic fuel cost per gallon to be $3.40, higher than the third-quarter actual figure of $3.26.

However, buoyant air-travel demand in the holiday period is likely to have boosted the top line in the quarter under review. We expect passenger revenues to jump 2.8% from the prior year. To match the upbeat demand, ALK is expanding capacity. The company expects available seat miles (a measure of capacity) to increase in the 11-14% band in fourth-quarter 2023 from the fourth quarter of 2022 actuals.

What Our Model Says

Our proven model predicts an earnings beat for Alaska Air this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Alaska Air currently has an Earnings ESP of +13.05% (the Most Accurate Estimate is currently pegged at 20 cents per share, 3 cents above the Zacks Consensus Estimate) and a Zacks Rank #3.

Q3 Highlights

Alaska Air reported third-quarter 2023 earnings of $1.83 per share, which missed the Zacks Consensus Estimate of $1.88 and declined 28% year over year. Operating revenues of $2,839 million lagged the Zacks Consensus Estimate of $2,876.1 million. However, the top line inched up 0.4% year over year. Passenger revenues, accounting for 92.2% of the top line, improved 0.1%.

Other Stocks to Consider

Here are a few stocks from the broader Zacks Transportation sector that investors may also consider, as our model shows that these, too, have the right combination of elements to beat on their fourth-quarter 2023 earnings.

American Airlines (AAL - Free Report) has an Earnings ESP of +43.10% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AAL is scheduled to report fourth-quarter 2023 earnings on Jan 25. The Zacks Consensus Estimate for earnings has been revised 200% upward over the last 60 days. AAL has an impressive earnings surprise history, having surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 23.83%.

Canadia National (CNI - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank #3. CNI is scheduled to report fourth-quarter 2023 earnings on Jan 23.

Canadian National has an unimpressive earnings surprise history, having surpassed the Zacks Consensus Estimate only once in the preceding four quarters and missing thrice, the average miss being 0.05%.

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